Wendy Brown

I meet people all the time who ask me the question, "What's my home worth?" My favorite answer is, "It depends."

We all know the definitions: market value is the estimated price at which an informed buyer will buy in an arm's length transaction; assessed value is the value upon which taxes are assessed as determined by either a contract appraisal firm or a government official; appraised value is the value that an appraiser given directions as to the purpose of the appraisal (because the purpose matters!) reaches; replacement cost is the cost to replace the existing structure should the need arise. Heck we can throw in estate value and, finally, sales price. Then we can ask the question, how can you assign a value to a home when that's the center of your familial and emotional life?

We didn't actually ask that question in the past unless we were going to sell the house or refinance...because it was our home. Now it's viewed as an investment, collateral, retirement fund...a commodity.

So, taking into consideration today's definition of home as a commodity, I guess the question really is what do you want to do? If you want to sell, how soon? If you want to sell are you willing to invest a bit more to improve the condition or are you selling "as is"? If you want to sell, how flexible will you be with showings, exposure, etc.?

Let's take a few real life examples. A bank owned property was recently priced so attractively that it had over 60 showings in the first three days it was listed and resulted in multiple offers. The offer accepted was well over the list price. The listing agent had been directed to price it so it would sell within 30 days, so the price was deliberately lower than anything around it had sold for in the last six months. The "auction" atmosphere was deliberate.

Another property that was listed was strategically done. After a review of all the statistical information available, it was determined that the house should be price just below a price tier (e.g. $300,000 to $399,999, $400,000 to $499,999) that wasn't moving very well. Although the home could have sold for more over a longer period of time, the seller agreed to price slightly (i.e. $2,000) below the price tier that wasn't moving. It appeared to be well-priced, was shown quite a few times in the first few days and was sold at list price three days after it was listed. Again, a type of auction atmosphere was created, but not a frenzy...only those who recognized it for the bargain it was priced below its fair market value.

And yet another property was listed at a price that the seller wanted to net out of the property. The price is reasonable based on comparable properties. It's been listed for six months, is shown rarely (about once a month) and that's fine with the seller. Their goals were different than the other listings mentioned.

So, when asking the question, "What is my home worth?" be sure to explain what you intend to do with the answer and the timing that you have in mind in which to take that action.

There are all sorts of ideas about getting your house ready to sell, but the first thing any seller needs to do is decide they are going to sell...not just try to sell it. The difference in attitude is crucial to getting ready to sell your house.

Once the decision to sell is made, your home now becomes a product and, as such, you need to think about packaging or presenting your product in the marketplace. Here are some ideas:

1. Solicit advice from professionals...objective advice is invaluable!
2. Pack up the clutter. You are going to be moving anyway, so start the packing now with all of the items that are not critical to your day to day living or the staging of your home.
3. Remove personal photos and mementos...they are distracting when people come through to see the house.
4. Walk into your house as if for the first time. Does the front door need paint? New hardware? New welcome mat? How are the plantings? First impressions matter!
5. Clean the windows! We recently saw a dramatic increase in activity (and eventual sales price!) when a seller painted the trim and cleaned the windows in the front of the house.
6. Get rid of the cause of bad odors...don't try to mask them! Using a floral deodorizer is often much worse than the smell that it is designed to hide! Whether it is a litter box or teenage boys' feet...be prepared to hear about it and do something about it!
7. Make it sparkle!
8. Figure out where you are going to go during showings...don't plan on being there! Buyers spend more time looking at the house if the seller isn't there.
9. Take care of all the routine maintenance on equipment...service the boiler, change your air filters, vacuum under your refrigerator, clean your oven...it all shows pride of ownership.
10. Pack up your off season clothing and organize your closets...less clothing makes closets look bigger.
11. Consider a home inspection prior to sale so you will know what a buyer's inspector is going to see...help eliminate surprises. Many home inspection companies offer pre-inspection reports at discounted prices.
12. When you think you are done, give us a call and we'll give you our uncensored opinion!
13. Now the hard part...keep it neat and clean and ready for last minute showings!

Every time I talk with a customer about Buyer Agency, they always ask "Am I going to have to pay the commission?" My short answer is, you already will be.

Who brings the money to the transaction when a house is purchased? The buyer does. Unbeknownst to the buyer, the seller has entered into a listing contract stating how much commission he is willing to pay for the sale of the home. For our example, let's say 6%. In that listing contract, the seller and listing agent agree to offer compensation to a cooperating agent (a buyer's agent). Again, for our example, let's say it's 3% being offered to the cooperating agent. So the buyer, without being consulted, has agreed to pay a 6% commission...because it is included in the purchase price.

Is the buyer paying any more for representation in this scenario? Probably not. But let's cover some other scenarios.

A buyer enters into a buyer representation agreement with an agent and agrees to pay 3%. The buyer decides to purchase a property where the cooperating agent is being offered 2 ½%. What happens to the other ½%? There are several answers to that. The buyer can ask the seller to pay the difference or the buyer can pay the difference at closing. If the buyer has to pay the difference at closing, perhaps he would offer ½% less in the purchase price to cover the difference.

Another scenario is that the buyer wants to purchase a house where NO compensation is offered to a buyer's agent (e.g. a for sale by owner property). Again, he can ask the seller to pay the buyer agency commission or the buyer can offer less for the property to compensate for the commission that is being paid to the buyer agent. Either way, it is coming from the buyer's cash at closing!

Bottom line is that the buyer pays no more for representation than without it...and may actually pay more going without representation because there is no advocate for the buyer in the transaction. Remember, a buyer ‘s agent is working only for the buyer to get the best price possible regardless of the commission offered, implied or sought.

I've talked to a buyer on the phone or exchanged e-mails and we are about to meet for the first time...it feels a lot like a blind date! They have the edge, though, because they've seen my picture and I don't have a clue what they look like! "We'll be the ones driving the silver mini-van", they say...kind of like the guy with the red rose in his lapel!

So we meet and now, by law, I have to talk to them about buyer agency...a topic that makes most consumer's eyes glaze over with boredom (until something goes wrong!). So I describe it like this:

We've just met and we don't know much about each other, but the State requires me to ask you if you would enter into an agreement to have me represent you....in other words, before the first date is done I'm already proposing marriage! How about we do this...let's agree to sign an agreement that I'm going to represent you for a short period of time...today, this weekend, this week. At the end of our time together, we'll both be able to ascertain if the chemistry is right for us to continue. ..and have our second date! When the short term agreement is about to expire, I'll send you another agreement with a longer time frame associated with it. If you don't want to go on seeing me, you don't even have to send me a "Dear Jane" letter...you just don't sign the new agreement.

But, let's assume we get along great and I'm everything you hoped for in a buyer's agent and we enter into a longer representation agreement (we're going steady!). It is the buyer's agent's responsibility to be your advocate, your champion, your source for information, your partner in this search for the perfect property and to do so with your interests put first (kind of like a Stepford wife...it's all about you!)

The good news is we found your perfect property and you are happily going to your closing knowing that this wonderful relationship that started out like a blind date is going to end in a mutually agreed upon divorce without any of the messiness...and we'll stay friends!

I've been in real estate for over 30 years. I've seen markets soar and sour. I've seen interest rates so high that you would think you were charging your house to a credit card. I've seen government programs come and go with varying degrees of success.

Yesterday I had to look up a monthly mortgage payment. I'm old fashioned enough that I have a book of tables that dates back to 1982. My client wanted me to check to see what a monthly payment would be for a loan at 5 1/2%. I couldn't tell him. My charts didn't go below 9% and the formulas didn't go below 6%, but they went up to 20%. It reminded me that today's mortgage rates are amazingly low...historically low...and can't possibly last.

There's a rumor floating around that the government would be endorsing or backing or causing a mortgage rate of 4% to be made available to the public. That's probably not going to happen. And it probably shouldn't. Historically, mortgage rates of 7% to 10% signal a healthy economy...anything above or below those rates mean something isn't right.

If I were to characterize my political leanings, I would say I'm a liberal leaning independent with strong faith in a free market economy. That sounds a bit contradictory, but I can live with it. I have faith that the housing market will make a recovery faster if it is left somewhat alone. The free market economy will find solutions to the problems because, as a nation, we are fairly creative.

Recently I heard of some investors who put together a "vulture fund". They bought up about 40 non-performing mortgages. They paid about fifty cents on the dollar (an amount greater than what the lenders would have gotten if they went through with the foreclosures and then sold the properties). The fund manager then went to the individual borrowers and renegotiated the loans. Here's an example: they had bought a mortgage with a face value of $400,000 and paid $200,000 for it. They went to the homeowner and asked if they would like to rewrite the loan for $300,000 at current market rates. If the borrower/homeowner was able to qualify for this new loan, they could stay in their home. If they couldn't qualify for the new loan, the fund asked if they would like to rent it back for a year. In both those scenarios, the home did not go into foreclosure nor did the homeowner have to move. Saving a home from foreclosure helps the neighborhood, the community...the housing market. And the investors are looking at a great return on their investment! If the loan was rewritten, they picked up 50% return on their asset...plus a reasonable income stream from the payments. If the loan wasn't rewritten, they got an income stream that allowed them to sit out the declining real estate market for a while before putting the house on the market.

This investment strategy was done without TARP money, without taxpayer money, without government intervention. It was done with private money and ingenuity. The original lender got rid of a non-performing asset that was written down to practically no value on their books and replaced it with cash, thus improving their balance sheet. The investment fund is providing great yields to the investors. The homeowner is still in their home. There are a few smiles out there.

So where are these ramblings taking me (and, more importantly, what do they mean to you?) In my experience, I haven't seen more bargains in real estate than I am seeing today and I haven't seen mortgage rates much better than they are today. It doesn't get much better than this for buying real estate! Credit is loosening, mortgages are available and somewhere out there is a property that will make you happy you are looking to buy! As for selling, stay strong and patient (and if you don't need to sell, don't put it on the market!) and stay realistic. It's taking longer to sell unless the property is priced to compete with the foreclosures and short sales. But there are still buyers looking at ALL listings.

To quote Warren Buffett: "A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful." Now is the time to buy.